Ethereum bulls may already be facing their biggest test of the third quarter. On the macroeconomic front, risk aversion returned quickly after the breakdown of the ceasefire between the United States and Iran, triggering a sharp sell-off across the market. This highlighted how risky assets remain sensitive to geopolitical developments. A recent position from an Ethereum trader highlighted this volatility.
According to Arkham Intelligence, an Ethereum trader opened a short position of $86.99 million ETH, with liquidation set at $2,172. This position notably emerged after headlines about the failed ceasefire and the US breaking a trade deal with Spain, adding further pressure to market sentiment. This suggests that the position was likely a calculated bet on further decline rather than a random sell.
Adding to the market uncertainty, Arkham Intelligence also reported a wallet move linked to Ethereum founder Vitalik Buterin, who moved $1.6 million worth of ETH to a new wallet. The move sparked speculation that a further sale could take place, especially after Vitalik’s recent $ETH transfers. With the market already returning to risk aversion mode, the combination of possible selling pressure and a large $80 million ETH short position has created a more cautious setup for the bulls. The key question now is whether this short position is an early signal of a deeper $ETH breakout or whether the bulls can defend key support levels and trigger a short squeeze.
Testing Critical Support as Bearish Pressure Increases
Ethereum sits at the crossroads of bearish market conditions and a strong technical setup. As risk aversion, rising short interest, and selling pressure support the bearish scenario, Ethereum is retesting the key support level of $1,580. This area has been a major demand area over the past three years, triggering strong recoveries, including an increase of +149% in October 2023 and +203% in April 2025.
For the bulls, it is therefore essential to defend $1,580 to keep the bullish structure intact. Adding to the supporting narrative, Tom Lee-linked Bitmine continues to accumulate $ETH. According to Lookonchain, Bitmine purchased an additional $40,000 ETH, worth approximately $71.6 million. At the same time, the supply of $ETH staked reached a new all-time high of over 40 million $ETH, representing approximately 33% of the total supply.
With this accumulation, $ETH’s move above $1,750 appears to be more than just a short-term rebound. Instead, the bulls appear to be stepping in despite the broader environment of risk aversion, rising short interest, and market concerns over Vitalik’s recent $ETH transfer. If this momentum continues, the $80 million short position could come under pressure, with the risk of liquidation rising around $2.7k. In this configuration, the technical structure of Ethereum could set up a bear trap.
